Heart of coal

Ashes of what made Duke Energy so powerful now smudge its reputation.

By Edward Martin

Spring peepers and songbirds should be chirping, but there’s only silence this bitterly cold morning on the empty hillside 10 miles south of the Virginia line, where a northeast breeze hints of snow as it ripples the broom straw. From here, the rough terrain slopes down to the Dan River, and across it, a mile distant, mist mutes the decommissioned power plant’s redbrick bulk. It succumbed two years ago this month, at the age of 64, to cleaner and more efficient technology. Water vapor wafts from a nearby combined-cycle electricity plant, where heat from burning natural gas is used and reused, capturing what was once lost up smokestacks.

The four giant stacks of Duke Energy Corp.’s Dan River Steam Station exhale nothing, idled like the steep conveyors that carried coal to its burners. The ash that was left behind went into a storage basin beside the river, where this morning as many as 200 workers in hard hats, waders and rubber gloves labor. Across a plain of dark-gray ooze, yellow excavators teeter on the edges of gullies deep enough to swallow them. Until recently, this was a 27-acre lagoon, a pond the size of two-dozen football fields. Now, there’s only drying ash the texture of loose soil. Until a pipe under the basin ruptured and the Dan River ran gray in early February, few North Carolinians thought that much about coal, though it generates about four of every 10 kilowatts of electricity used at their workplaces and homes. As a threat to their health, few feared it the way they did its electricity-generating cousin, nuclear power.

But coal has a troubled legacy, dark as the 35 million gallons or more of water laced with toxic ash that leaked from this storage pond, causing one of the worst environmental accidents in North Carolina history. “When I went to work at Duke Power in 1963, virtually every office had a picture of a power plant with smoke billowing out of the stacks,” retired Duke Energy CEO Bill Grigg recalls. “It was a sign of industry and progress.” Coal tugged the state out of its agrarian past, nurturing a $90 billion manufacturing economy that is now the nation’s fourth-largest. But its impact also can be traced in skeletons of spruce and fir trees atop lofty Roan Mountain on the Tennessee line. Or in an up-and-coming Charlotte neighborhood where commuters in banker suits, oblivious to tainted soil underfoot, scan tablet computers while waiting for light-rail trains. Or at long-forgotten holes in the ground 110 miles northeast of the Queen City, where men died digging it nearly a century ago. Or in the more than 500 mountains leveled and 2,500 miles of streams obliterated in neighboring states to mine it. Now coal, considered by many a relic of the past, has come back to haunt the state in the form of ash. Stored in lagoons like the two at Dan River, it leaches arsenic, selenium, mercury and other heavy metals and chemicals known to cause cancer and other diseases into the ground and, occasionally, rivers. “We’ve got these things all over the South — all over the U.S. — and they’re ticking time bombs,” says Amy Adams, a former North Carolina water-quality regulator.

Scientists say the more than 100 million tons of ash Duke Energy has stored at 14 sites in North Carolina, many 50 or more years old, constitute the largest pollution threat facing the state. Nearly 800,000 people drink Charlotte’s water, but just 3 miles upstream from the intake on Mountain Island Lake, 5 billion pounds of ash — four times that at Dan River — is stored at Riverbend Steam Station, which was shut down in 2012. “Dan River got people’s attention, but these coal-ash impoundments every minute of every day are contaminating our ground and surface water,” says John Suttles, the Chapel Hill-based head of litigation for Charlottesville, Va.-based Southern Environmental Law Center. A colleague concurs. “Until recently this was the big, dirty secret of Duke Energy,” says Frank Holleman, the nonprofit’s senior attorney.

Coal has even smudged politics with a federal investigation that could result in criminal charges. A grand jury is looking at possible links between Charlotte-based Duke Energy — the nation’s largest electric utility — and state regulators. The spill, critics say, exposes the soft spot Duke Energy has with Gov. Pat McCrory, who worked there nearly three decades before making his first run for governor in 2008 after a record 14 years as Charlotte mayor. That unsuccessful bid was followed by his victory in 2012. He and the Republicans who captured both houses of the state legislature in 2010 have gutted environmental regulations and enforcement budgets.

In January 2013, little more than a year before Dan River became the site of the nation’s third-worst ash spill, the Southern Environmental Law Center sued Duke Energy under tough federal clean-water laws, trying to force it to shut down and make safe its ash ponds. The N.C. Department of Environment and Natural Resources, headed by McCrory appointee John Skvarla, blocked the lawsuit. DENR fined the utility $99,111 but didn’t order it to remedy the situation. Had the spill not occurred, this might have saved the company hundreds of millions of dollars. Duke Energy CEO Lynn Good says the utility probably will try to pass costs of moving its coal ash to its 7.2 million customers, including 3.2 million in North Carolina. By some estimates, that figure could top $1 billion, possibly adding 75 cents a month to a typical household bill for the next 15 years. “The state jumped in to thwart a citizen effort to enforce federal laws designed to protect the people of North Carolina, then quickly reached a sweetheart deal for a penalty that’s chump change,” Suttles says. “What we’re seeing is not dissimilar to the politics of the robber barons of the late 19th and early 20th centuries. Vested interests with lots of capital spend it freely on political campaigns. They wield enormous political clout that keeps us shackled to an outdated, highly polluting and inefficient technology.”

Month after month, the rocky Catawba and Yadkin shrank. James Buchanan Duke, the tobacco tycoon who had turned his attention to powering the Piedmont’s burgeoning textile industry in the early 1900s, had trusted the rivers to generate enough electricity to run the mills. “There was drought, hydro was inadequate, and there were power shortages,” says Grigg, who as president of Duke Power Co. engineered the 1996 merger with Houston-based PanEnergy Corp. that created Duke Energy. “Mr. Duke came up with the idea of building coal-fired steam plants to back up hydro. From then on, hydro became relatively smaller and smaller.”

Duke Power’s addiction to coal began when its founder built small coal-fired power plants in Greensboro and Greenville, S.C., in 1911. South of downtown Charlotte, where another plant turned coal into gas for lights and heating, byproducts spilled on the ground. Ninety-odd years later, they would cost developers hundreds of thousands of dollars in delays and remediation. Buck Duke lived just long enough to glimpse coal’s angry side. Explosions in coal mines southwest of Raleigh in Chatham County — near the center of today’s nascent gas-fracking territory — killed scores of workers. The 1925 blast that took 53 lives in the hamlet of Coal Glen is still the state’s deadliest industrial disaster. Mining coal would never be a major Tar Heel industry, not with it so abundantly cheap in neighboring states.

In 1926, on the banks of the Yadkin near Spencer, Duke Power’s first mammoth coal-fired plant began generating electricity. Buck Steam Station could produce six times as much electricity as the company’s largest hydro plant. Electricity use soared 20% that year, as residential customers plugged in. In 1929, Duke Power began operating its Riverbend station on the Gaston County side of Mountain Island Lake, an impoundment on the Catawba. Other coal-fired plants followed. Dan River station, a relative youngster, was built in 1949 and ceased operating only in April 2012. Buck Steam and Riverbend Steam outlived it by only a few months.

Through the Depression and World War II and its aftermath, coal’s hold tightened, eventually leading the company into one of its worst blunders. “At one point, our supply dropped to 23 days,” Grigg recalls. “If we’d run out of coal, it would have been disastrous. We couldn’t run that risk.” In 1970, the company bought four mines in Harlan County, Ky., and formed a subsidiary, Eastover Mining Co., to run them. Three years later, “Bloody Harlan” — the name the county earned during the labor strife of the ’30s — erupted again, with the company pitted against the United Mine Workers. Strikebreakers were brought in. Miners — their wives and, in some cases, their children in tow — were thrown in jail. A popular young union leader was gunned down. Duke Power sold the mines, but not before its reputation was tarred in a documentary film, Harlan County, USA, that won an Oscar in 1976.

Not that the perils of coal were new to the company. “Smoke is usually the first form of pollution people notice,” says Matthew Booker, a professor of environmental history at N.C. State University. As knowledge of acid rain — blamed for sterilizing lakes and killing trees — grew, smokestacks became a symbol of corporate contempt for the environment. Duke Power, to its credit, sought alternatives. In the 1950s, natural-gas technology began improving. The fuel burned cleaner and packed more power than coal but was scarce and better scaled for residential use. Congress passed the Powerplant and Industrial Fuel Use Act in 1978. “That banned burning natural gas in new power plants,” Grigg says. “At that point, coal and nuclear became our only two viable sources. In the 1960s, about when I joined the company, we’d already moved into nuclear in a big way.”

That, too, failed to wean Duke Power off coal. Within a year of the licensing of its first nuclear plant — Oconee, near Seneca, S.C., in 1967 — a third of the utility’s electricity was generated by fission. But in 1979 the Three Mile Island disaster in Pennsylvania triggered voluminous safety regulations that sent costs for such plants skyrocketing. In contrast to the $500 million cost of Oconee, the company’s newest nuclear plant, Catawba in York, S.C., was completed in 1985 for $6.5 billion. The utility dropped plans for six more nuclear sites, leaving it with seven today. Forty-four percent of the power it generated last year came from coal, and about a third was from nuclear. That’s roughly the same mix as in 1967. While coal ash is stored in vulnerable, open-air ponds, utilities spend billions to stash spent fuel rods on site but under rigid, government-mandated security. “If somebody did what Duke is doing beside Mountain Island Lake — dig a big, unlined hole in the ground and start dumping even your plain old municipal waste in — they’d be thrown in the penitentiary,” Holleman says.

Paradoxically, coal has an environmental success story to tell, though even it has a twist. Government-mandated scrubbers and catalysts installed since the early 1990s have reduced acid rain by removing up to 95% of sulfur and nitrogen oxides from coal-plant emissions. A small portion of the residue, certified safe by the Environmental Protection Agency, is used in wallboard and other products by, among others, Charlotte-based National Gypsum Co. “Chemically,” spokeswoman Nancy Spurlock says, “it’s the same as the gypsum we mine from the ground.” However, most of what’s removed is stored in the coal-ash ponds.

On a quiet morning just a few miles from Duke Energy headquarters, Bill Grigg thinks back on his company’s long bond with coal. He, too, counts the ironies. “We felt nuclear was the way to go.” Over time, he predicts, coal’s role will diminish, nudged aside by increasingly cheaper natural gas, no longer prohibited, along with more nuclear, wind and solar. But it won’t disappear. “Coal has been an up-and-down thing, but it has always been the one constant source.”

Company spokesman Jeff Brooks shivers against the cold. Along the bank of the Dan, dump trucks haul rock and gravel to build access roads across the dismal gray field that days earlier was filled with water. Motel rooms for miles around Eden are packed with Duke Energy employees and contractors who rushed in to stanch the flow of ash slurry and clean up its consequences. The principle here and at similar coal-fired plants is simple: Wash ash into a primary pond, where most of it can settle to the bottom, then flow the water into a secondary pond for further settling. The primary lagoon here had been extended over a 4-foot-diameter pipe that carried rainwater runoff into the river. Though engineers assumed it was all reinforced concrete, part of the pipe under the pond was rust-vulnerable corrugated metal. When that section ruptured Feb. 2, “it acted like a vacuum, like a drain in your bathtub,” Brooks says. It sucked ash-laced water into the river.

The political controversy is far more complicated. Its roots go back to the state’s hog-lagoon disaster in 1999 and the collapse of a coal-ash pond in Tennessee that poured 1.1 billion gallons of slurry into the Emory and Clinch rivers. “You had the floods in eastern North Carolina that underscored the problems with waste lagoons, and then the [Tennessee Valley Authority] really put everybody on notice,” says Holleman, the lawyer. “The TVA in 2008 had just received a report saying everything at its Kingston plant was good. Then the dam spontaneously burst. Conservation groups began warning that if ash lagoons were not fixed, there would be a disaster in North Carolina. DENR blew off those warnings.”

The hog-lagoon failures were triggered by nature’s violence, flooding from Hurricane Floyd’s rain. The ash-pond disasters were man-made, caused by forces no more tumultuous than gravity in the TVA case or rust at Dan River. The Southern Environmental Law Center and other advocate groups in North Carolina repeatedly had demanded in lawsuits that the state take action against ash ponds. Order Duke Energy, they said, to move ash to landfills with linings that retain seepage. Duke Energy resisted, citing cost. “You’re talking about a 20-year train of trucks leaving every three minutes from these sites,” spokesman Tom Williams says. “There are other ways to do it.” The company’s preferred method: capping ash ponds with impervious coverings. After the law center sued two utilities in South Carolina in 2012, they quickly settled and agreed to close basins at their coal-fired plants and move the ash to lined landfills. Jim Landreth, who heads Columbia-based South Carolina Electric & Gas Corp.’s fossil-fuel operations, calls it “a good example of how industry, stakeholders and government agencies can work together.”

Duke Energy declined to provide executives, including CEO Good, for interviews for this article. McCrory spokesman Josh Ellis did not respond to repeated requests for a response from the governor, nor did spokesmen for N.C. House and Senate leaders. In Raleigh, the office of U.S. Attorney Thomas Walker confirmed that about 20 DENR employees and others had been subpoenaed in connection with a “criminal investigation of a suspected felony.” The subpoenas seek records of cash, checks, stocks or other valuables that changed hands between Duke Energy and agency employees, including correspondence going back to 2010.

Though lack of state action to force the utility to clean up its ash ponds predates Republican reign in Raleigh, the spill has been especially embarrassing for the party due to its anti-regulatory rhetoric and actions and the governor’s ties to the company. State Board of Elections filings show that Duke Energy’s political-action committee, along with executives and related sources, have given his campaigns more than $1.1 million since the beginning of his first bid for governor. Democracy North Carolina, a liberal political watchdog group, found that his two campaigns received about $10 million from The Republican Governors Association, which got about $760,000 from Duke Energy sources. McCrory has declined to reveal how much of its stock he has or holds in retirement accounts, though campaign filings list its value as “more than $10,000.”

Initially silent on the spill, McCrory appeared at the site four days after the incident went national and urged the utility to remove ash the from sites near waterways. DENR asked a state judge to suspend its settlement with the utility, but nearly a month passed before it cited Duke Energy for environmental violations at Dan River and five other coal-fired plants — Belews Creek in Rockingham County, Cliffside in Rutherford, Lee in Wayne, Roxboro in Person and Sutton in New Hanover. On March 21, DENR announced it was abandoning its settlement of the lawsuits and had called on the EPA for help. That came only days after the Whitewater Alliance, an environmental group, had shown Duke Energy was pumping water from ash ponds in Moncure into a canal that empties into the Cape Fear River.

As regional supervisor for a DENR division, Amy Adams was responsible for 21 counties, including one that was home to Lee Steam Station, a troubled coal-fired plant near Goldsboro operated by Raleigh-based Progress Energy Inc. prior to its merger with Duke Energy in 2012. Though shut down that year, hundreds of tons of ash remain. Adams and other regulators rated its five ponds as high hazard, based on their being within a few hundred feet of the Neuse River. Nearby groundwater tests showed arsenic levels 50 times higher than EPA allows.

Soon after the 2010 Republican legislative takeover, she and her colleagues were told to review more than 400 long-standing regulations. “Legislators earmarked what they wanted looked at first. They were water-quality regulations and wetlands regulations” — rules applicable at Dan River, Lee and the other plants. “They were some of our strongest rules and, arguably, should be. They put them on the chopping block.” With McCrory’s appointment of Skvarla as DENR secretary — he’s the former CEO of a Raleigh business that performed wetlands mitigation — the agency was hit again. “We were told, ‘You need to improve your customer service. And by the way, your customer is now the industries you regulate, and you need to be improving your relationship with them,’” Adams says. “The people of North Carolina were no longer our customers. To me, that just felt backwards.”

In June 2013, Skvarla named veteran Tom Reeder head of DENR’s new Division of Water Resources, which had absorbed the Division of Water Quality, where Adams worked. At the Dan River station, three state employees wearing reflective safety vests with bold “DWQ” lettering monitored Duke Energy’s progress plugging the pipe. When asked if that stands for Division of Water Quality, one replies icily: “It used to.”

Cuts at DENR continue, even after the accident. About 70 positions were eliminated March 1, leaving about 430 in the water-resources division. The state turned down a $600,000 appropriation from the EPA last year — it would have helped monitor groundwater near gas-fracking sites — because it no longer had the Division of Water Quality. Adams resigned last fall. She’s now North Carolina campaign coordinator for Boone-based Appalachian Voices, an environmental nonprofit. Her exit was quiet. Susan Wilson, her counterpart in Asheville, where Duke Energy’s 324-megawatt coal-fired plant is its largest in western North Carolina, also cited matters of conscience when she submitted her resignation to Skvarla. But hers came in the form of a video set to the tune of the country song “Take This Job and Shove It.”

Now, two months after the Dan River spill, consequences unfold daily. A Superior Court judge in Raleigh ruled in March that Skvarla’s staff had failed to follow the law by not forcing Duke Energy to clean up ash basins. He ordered the company to immediately begin remediation efforts. Nobody, though, expects this to signal the end of coal’s checkered presence in North Carolina life. Duke Energy has spent billions in new technology to limit burning coal’s impact on air. In a recent presentation to stock analysts, CEO Good projected that coal will provide 38% of the utility’s energy in 2015 and beyond. That’s down substantially from 55% in 2005. But company sources say they doubt it will ever drop to less than a third.